GIM3060 - Regulatory framework: ‘authorised persons’ and ‘permission to carry on regulated activities’

FSMA 2000 unified the previous regulatory regimes which applied to insurance companies, banks, building societies and other financial concerns, and its approach is therefore somewhat different from that which applied under Insurance Companies Act 1982. Under FSMA 2000 the broad scheme of authorisation and regulation is that no person may carry on a ‘regulated activity’ unless an ‘authorised person’. A regulated activity is an activity of a specified kind which is carried on by way of business and relates to an investment of a specified kind. Contracts of insurance are included in the list of regulated activities and investments in by virtue of section 424 of, and Schedule 2 to, the Act.

An authorised person is one who has received permission under Part 4 FSMA 2000 to carry on one or more regulated activities, or who qualifies for authorisation as an EEA or a Treaty firm under Schedule 3 or Schedule 4 FSMA 2000 (see GIM10010 on EEA and Treaty firms). The purpose of authorisation is to ensure that authorised persons satisfy the necessary ‘threshold conditions’ to engage in the ‘regulated activity’ and to approve ‘fit and proper persons’ to perform ‘controlled functions’ in the financial services industry.

The FSA’s detailed rules by which it exercises its regulatory powers are set out in the FSA Handbook (GIM3070).